Grading 3 Transportation Stocks to Buy Amid Surprising Sector Rally
Transports are on a roll, but which sector stocks are the best to own right now?
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Mega-cap technology stocks are taking a breather after leading the charge for the past two years, and the spotlight has shifted to less-popular sectors that have been left behind.
For example, capital is flowing into transportation stocks, which have been stuck in a range since mid-2021. This sector is dominated by airlines, railroads, trucking and package delivery services. For the past three years, the names in this sector have moved sideways, failing to participate in the bull market.
Starting last week, something changed. The sleepy transportation sector has finally awoken.
Starting on July 10, 2024, the Dow Jones Transportation Average ^DJT gained 8.7% over five consecutive sessions to close at its highest level in nearly a year. The rally was accompanied by a healthy increase in volume (shaded yellow below), which suggests this move might have legs.
The bellwether transportation index vaulted past a thicket of resistance that had contained it for most of this year (shaded green below), and has climbed well above its 50-day (blue below) and 200-day (red below) moving averages. The next major area of resistance is a peak from July 2023 (red arrow below), located at 16,707.
We sifted through the components of this index to find the best names contained therein. What we found may surprise you.
1. FedEx
According to the charts, here are the three best transportation stocks to own right now is FedEx FDX.
FedEx’s weekly chart reveals a series of higher highs (HH) and higher lows (HL). This stock has been trending higher since September 2022.
The package delivery giant has gained 24.29% year to date, and further gains could lie ahead. FedEx is trading about 2% below its all-time high of $319.90 (red arrow below), recorded over three years ago. One more strong day, and the stock could reach a new all-time high. Grade: B.
2. Ryder System Inc.
Chances are you’ve seen Miami-based Ryder trucks on your local highway, but have you checked the company’s R stock lately? Ryder is taking investors for a bullish ride, as it explodes to fresh all-time highs.
Ryder has gained over 20% year to date, and boasts a five-year gain of 132%. The only negative is that Ryder’s relative strength index (RSI) is overbought, with a reading of 72 (green arrow above). Ryder is scheduled to report earnings on July 25. Grade: B+.
3. Kirby Corp.
Kirby Corp. KEX operates tank barges in the Mississippi River system, specializing in bulk liquid products. That may not sound exciting, but owners of this stock are very excited by its performance.
Kirby reached an all-time high on heavy volume earlier this week (arrow above). The stock’s bullish trend is accelerating. There is no overhead resistance, and plenty of upside momentum.
Shares of the Houston, Texas-based barge operator have gained 64% year to date. The company is scheduled to report earnings on August 1, 2024. Grade: A.
Bottom line: I’m opening small positions in both Kirby and Ryder, with the option of adding additional shares if warranted.
At the time of publication, Ponsi was long KEX and R.
